European shorts, packaging, and financials with investor George Livadis | Value After Hours S06 E39
Oct 28, 2024
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George Livadis, founder of Upslope Capital in Denver, shares insights from his journey in finance, detailing his transition from investment banking to hedge fund management. He discusses short selling mid-cap stocks and the importance of adaptive strategies during market fluctuations. The conversation highlights the rise and fall of Nortel Telecommunications, providing valuable lessons for current investors. Livadis also analyzes Apple’s product evolution, Nvidia's market dominance, and the complexities of the housing market, weaving personal anecdotes with financial expertise.
George Livadis shares his unique career path from investment banking to managing his hedge fund, Upslope Capital, showcasing diverse experiences in finance.
Upslope Capital's long-short equity strategy emphasizes balancing positions to reduce volatility and manage risk in market environments dominated by larger cap stocks.
Reflecting on past market bubbles, George stresses the importance of vigilant risk management and downside protection in today's volatile investing landscape.
Deep dives
George Lovatis' Background and Investment Journey
George Lovatis shares his investment background, starting his career in investment banking before transitioning to finance. He became interested in investing during the financial crisis while in business school, leading to a fascination with managing money. Initially investing on his own without much understanding, he eventually made his way to the buy-side to manage his fund, Upslope Capital, based in Denver. His diverse career path showcases how unique experiences can cultivate a deep understanding of market mechanics.
Upslope Capital's Investment Strategy
Upslope Capital operates as a long-short equity hedge fund with a focus on mid-cap and developed market stocks. The fund aims to deliver equity-like returns while maintaining lower volatility and market risk, which sets it apart from traditional long-only funds. George emphasizes the importance of balancing long and short positions, particularly in a market landscape dominated by larger cap stocks. This strategy allows Upslope to navigate various market conditions while managing risk effectively.
Shorting: Strategies and Challenges
George discusses the complexities of identifying and executing short positions, particularly concerning foreign stocks and the challenges posed by time zone differences. He categorizes his shorting strategy into various types, including cyclical shorts and those stemming from fraud or unsustainable business models. The podcast highlights his experiences during the 2020 SPAC bubble, which provided numerous opportunities for shorting. His approach is characterized by careful position sizing to mitigate risks associated with potential volatility in these investments.
Market Performance and Hedge Fund Dynamics
George reflects on the historical performance of hedge funds, particularly during bull markets, noting expectations to lag behind the overall market when it rises sharply. Despite this, he emphasizes the importance of downside protection as a core principle of his strategy. With the market experiencing significant fluctuations, George remains cautious about current conditions, particularly with the dominance of the Magnificent Seven stocks. He believes that while hedge funds may struggle during uptrends, they can outperform in flat or declining markets, reinforcing their hedging purpose.
Lessons from Market Bubbles
The discussion shifts to market bubbles, with George referencing past experiences to draw lessons for the future, particularly related to companies like Nortel. He examines the pitfalls of rapid growth without solid foundations, emphasizing how excessive enthusiasm can lead to devastating consequences. The conversation about scaling and managing risk becomes pivotal, highlighting the need to remain vigilant against market excesses. Overall, George's insights into historical market dynamics serve as a cautionary reminder for investors navigating today's volatile environment.
Value: After Hours is a podcast about value investing, Fintwit, and all things finance and investment by investors Tobias Carlisle, and Jake Taylor. See our latest episodes at https://acquirersmultiple.com/podcast
We are live every Tuesday at 1.30pm E / 10.30am P.
About Jake
Jake's Twitter: https://twitter.com/farnamjake1
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ABOUT THE PODCAST
Hi, I'm Tobias Carlisle. I launched The Acquirers Podcast to discuss the process of finding undervalued stocks, deep value investing, hedge funds, activism, buyouts, and special situations.
We uncover the tactics and strategies for finding good investments, managing risk, dealing with bad luck, and maximizing success.
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ABOUT TOBIAS CARLISLE
Tobias Carlisle is the founder of The Acquirer’s Multiple®, and Acquirers Funds®.
He is best known as the author of the #1 new release in Amazon’s Business and Finance The Acquirer’s Multiple: How the Billionaire Contrarians of Deep Value Beat the Market, the Amazon best-sellers Deep Value: Why Activists Investors and Other Contrarians Battle for Control of Losing Corporations (2014) (https://amzn.to/2VwvAGF), Quantitative Value: A Practitioner’s Guide to Automating Intelligent Investment and Eliminating Behavioral Errors (2012) (https://amzn.to/2SDDxrN), and Concentrated Investing: Strategies of the World’s Greatest Concentrated Value Investors (2016) (https://amzn.to/2SEEjVn). He has extensive experience in investment management, business valuation, public company corporate governance, and corporate law.
Prior to founding the forerunner to Acquirers Funds in 2010, Tobias was an analyst at an activist hedge fund, general counsel of a company listed on the Australian Stock Exchange, and a corporate advisory lawyer. As a lawyer specializing in mergers and acquisitions he has advised on transactions across a variety of industries in the United States, the United Kingdom, China, Australia, Singapore, Bermuda, Papua New Guinea, New Zealand, and Guam.
He is a graduate of the University of Queensland in Australia with degrees in Law (2001) and Business (Management) (1999).
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